ProstCost – Part 1 of 3: Missing the Benefits

Recently, sex work activists on Twitter took notice of a news story about the recently publicized ProstCost study by Le Mouvement du Nid that claims prostitution costs France 1.6 billion euros per year. Since the internet is full of studies of “the cost of X” that are little more than some organization’s talking points. I thought it might be worthwhile to take a closer look at this study.

Before getting into my thoughts, I have a few important caveats:

1. I’m working from a summary of the study, not the actual study, which I believe is still unpublished. It’s often the case that formal studies are much more rigorous, nuanced, and cautious than the summaries and press materials that are prepared from them. So when I talk about “the study,” my comments really only apply to the summary of the study, taken as a standalone expression of its ideas.
2. The study summary is in French, which I can’t speak or read, so everything I’m writing here is based on a Google translation, which means there’s a fair chance that something got really mangled. I’m trying to stick with parts of the study that don’t seem to depend on subtle meaning, but there’s a pretty good chance I got something wrong.
3. I’m going to leave discussion of the quality of the data in the study to people like Maggie McNeill who know a lot more about the available data than I do. For my purposes, I’m not going to dispute the numbers in the ProstCost study. That doesn’t mean they are correct, however, because how would I know?
4. Prostitution is technically legal in France, but various related activities such as soliciting and pimping are not. Law enforcement definitions in this area are often real stretchy (e.g. two sex workers operating together may be arrested for pimping each other) so in practice prostitution is still pretty much a crime. Consequently, I’m going to assume for purposes of the study that basically all arrests are of prostitutes, even if that’s not the charge against them.

With those warnings in mind…

Some have speculated that the ProstCost study is intended to discourage further decriminalization and even support re-criminalization of prostitution. If so, I think it fails to make its case.

The study is also a response to the European Union’s decision to start including prostitution in the the national accounting figures for Gross Domestic Product:

In 2014, the European Commission proposed that Member States the European Union to increase their “national wealth” including the turnover of prostitution in the calculation of their GDP. In France, INSEE has refused to bow to European demand explaining to rightly, that prostitution is akin least a “provision of voluntary services” as an exploitation of the people more precarious.

ProstCost, unpublished study by the Mouvement du Nid – France and Psytel takes from behind the myth of creative prostitution increasing growth and provides an estimate of the dual economic burden and the social system of prostitution poses to his victims and the whole society.

Mouvement du Nid appears to believe that counting prostitution in the GDP figures will normalize it and make it politically more difficult to fight, and this study is apparently intended to show that prostitution is in fact a burden on the economy. I don’t believe the study makes this case either.

When analyzing a policy choice such as whether or not prostitution should be legal, the most useful approach is probably a benefit-cost analysis of the effect on social welfare. Which leads me to the most important question you can ask about a study purporting to show the cost of something: Does the study include benefits as well? Because if you count only the costs, everything seems like a bad idea. A fair evaluation requires examining the good and the bad.

That doesn’t mean studies that only account for costs are necessarily faulty or deceptive. It can make sense to study only the costs as long as everyone understands that a complete analysis will require study of the benefits as well. For example, we may know the cost of producing a new drug from a pharmaceutical corporation’s recorded expenditures, but we might not have a very realistic idea of its effectiveness until people have been taking it for a few years.

Studies also don’t discuss benefits when the benefits are already well understood. Probably the most common example is when there are no benefits, such as with diseases and natural disasters. Hurricanes and pandemics are deadweight losses which have no upside, so studies don’t bother to account for any benefits.

Unfortunately, some studies assume away all benefits in situations where it’s misleading at best and deceptive at worst. For example, I’ve been meaning to blog about this study, which I believe is the source of several reports on the cost of alcohol consumption. The problem is that the study doesn’t even attempt to account for the benefits of alcohol consumption — benefits which are obvious to anyone who’s had a nice wine with dinner or partied the night away with friends.

That doesn’t mean the study is crap. The public health entities that fund these studies aren’t interested in parties, so they don’t need that in the study. What it does mean, however, is that you can’t use studies like this to answer questions about whether it’s a good policy to allow people to drink alcohol. The study implicitly assumes that alcohol consumption is only bad.

The ProstCost study similarly fails to discuss the benefits of prostitution, so it isn’t suitable for answering the question of whether prostitution should be a crime. By neglecting the benefits, it is implicitly assuming that prostitution is always bad.

We can try to fix that by coming up with an estimate of the social benefits of prostitution in France. You might think this would be a massive research project involving lots of fuzzy estimates of intangible benefits, but economists have developed a neat trick that works in situations like this, and it turns out that the ProstCost study already has all the information we need.

The key insight is that when you buy something, you don’t generally pay more than it’s worth to you. Oh, you might complain that the price is too high, but you don’t really mean it, in the sense that you still go ahead and buy it. You might think that $50 steak dinner in the hotel restaurant is overpriced, but if you still buy it, it’s pretty clear that you must have thought, in some sense, that it was worth $50 to you.

Or more precisely, you must have thought it was worth at least $50 to you. You might think it was the best steak dinner you ever had — worth it at twice the price — or you might only just barely have been willing to part with $50 for the steak dinner rather than have something else. In either case we can sure you didn’t think it was worth less than $50, because $50 is what you paid. We can therefore safely assume that its value to you has a lower bound of $50.

The ProstCost study estimates that France’s 37,000 prostitutes earn about 3.2 billion euros per year. That’s the same as saying that prostitution clients are spending about € 3.2 billion per year. By the same logic we used with your steak dinner, we can deduce that prostitution clients are receiving benefits of at least € 3.2 billion per year.

Basically, we’re done right there. Even if we accept for the sake of argument that the ProstCost study’s estimate that prostitution costs € 1.6 billion per year, we can subtract that amount from the € 3.2 billion benefit to see that prostitution in France still produces a net benefit of € 1.6 billion per year.

That’s not the impression you’d get from press reports with headlines like “Prostitution costs France ‘€1.6 billion each year'” is it. Perhaps a better headline would be “Prostitution sector contributes €1.6 billion to French economy.”

In my next post on this topic, I’ll discuss the costs of prostitution, as identified by the study and as estimated by me.

Update: Part 2 is up.